Chan Kwong-hung, ex-Director and major shareholder of the defunct Ming Fung Group, was recently jailed for four-and-a-half years on one count of "conspiracy to defraud" by the District Court. Chan's accomplice, Lau Kwok-ming, ex-Dealing Director of Chark Fung Securities Co., a company under the control of Ming Fung Group, was sentenced to two-and-a-half years' imprisonment on the same charge.

The trial judge also disqualified Chan and Lau from taking up directorship for seven and three years respectively under the Companies Ordinance.

Following the liquidation of Ming Fung Group by the Securities & Futures Commission in May 1998, the Stock Exchange of Hong Kong described the incident as the biggest collapse of a securities trading company in the 12 years since its establishment.

In finding the defendants guilty, the judge said it was a sophisticated fraud scheme having caused an impact on the local business environment. He further commented that both defendants had made substantial planning difficult for shareholders to detect, and that Chan Kwong-hung's transfer of his $74.4 million indebtedness to shareholders by way of false accounting, was "a gross breach of trust".

The CCB investigation team, headed by Acting Chief Inspector Kok Wai-shing, was confronted with a very complicated securities fraud case in 2004, after the Securities & Futures Commission had alerted the police of serious problems concerning Ming Fung Group's financial solvency and liquidity.

The team's subsequent jobs involved sifting through a considerable amount of securities transaction documents - many dating back six years, some 150 bank accounts belonging to the eight companies under Ming Fung Group's control and used by Chan Kwong-hung to siphon off funds from Ming Fung Group, and conducting hundreds of interviews of victimised investors, bank account holders and staff of the defendants' companies. They also encountered considerable difficulties in retrieving evidence from the Group's tampered computer system.

When analysing the tremendous amount of documents and bank accounts, the investigation team had the benefit of independent and professional advice from Treasury Accountant, Mrs Jean Chan, and her Accounting Officer, Ms Winnie Ho, both on secondment to the Force.

Before prosecution was taken out, the investigation team managed to amass 2,600 different items related to the fraud, including around 1,000 carton boxes of account records, bank account records, trading records, invoices, ledgers and investors' daily and monthly transaction records, not to mention the hundreds of interview statements.

For the investigation team, a breakthrough came after Mr Kok had discovered eight bogus bank accounts Chan Kwong-hung had opened in the names of his close relatives for margin trading. This discovery enabled Mr Kok to focus his investigation into the transfers of the trading proceeds out of Ming Fung Group by Chan Kwong-hung over six months between December 1997 and May 1998 - the time of offence specified in the charge.

As it is often the case with other crimes, key witnesses are often reluctant to talk to the police. In the case of the eight bogus bank accounts, it was even more difficult for the investigation team members to get Chan Kwong-hung's relatives to speak up. Mr Kok, therefore, took the initiative to apply to the High Court for a Production Order under the Organised and Serious Crimes Ordinance, in a bid to obtain documentary evidence from Chan Kwong-hung's relatives. Meanwhile, with a lot of persuasion, patience and inter-personal skills, the team members eventually managed to convince Chan's relatives of the seriousness and implications of the case, and secure their full co-operation. Two of them even agreed to testify against Chan in court.

The investigation team members also applied the same human approach in getting co-operation and statements from an account manager in Ming Fung Group, who also agreed to testify in court.

Mr Kok gave credit to his team for cracking the fraud case. "The credit goes to all my team members, who have worked so hard and so patiently, and have left no stone unturned in their investigation. The Treasury Accountant, Mrs Chan, and her colleagues have also given us a big help too!" he said.

On the other hand, Mrs Chan is full of praise of the investigation team.

"Bearing in mind the sophistication of the modus-operandi, the investigation team members have done a really good job in securing evidence which stood up in court. It's a superb job with a lot of professionalism, hard work, determination and tenacity on the part of the team members," Mrs Chan commented.

CIP Kok (second right) with two members of his investigation team, SGT Chow Chi-kit (third left) and PC Leung Chun-sing (third right), Treasury Accountant Mrs Jean Chan (second left), and Mrs Chan's assistants - Winnie Ho (first right) and Andy Yip (first left)